The external consultant can bring fresh ideas to the firm. However, they may also be at odds with staff, as they are not as familiar with the norms of the company. The external consultant is often with the firm on a short-term basis. As soon as the project is over, they will move on to the next client on the list. Of course, they hope to establish a relationship that will be fruitful in providing work later, but this is not always the case. Their focus with a particularly client is always short-term.
The external consultant may be focused only on the problem and not how the problem relates to the normal functioning of the business. They do not have this level of insight into the internal workings of the company. However, their opinion may be more objective than that of the internal consultant. They will not be biased due to fear of rejection by a key client. Objectivity is the key advantage to the external consultant. The external consultant brings with them the ability to look at a problem as an outsider would look at the problem, without the influence of company politics.
One of the key disadvantages of the external consultant is that they are often more costly than the internal consultant, but this is not always the case. According to Kulpa (2007), you get what you pay for and a good consultant will cost more than a less experienced one. Consultant fees are closely related to their reputation, the more happy clients they can conjure up, the higher they can charge.
However, there is another side to the sticker shock experienced when one hires an external consultant. It is true that their hourly rates sound ridiculously high, as compared to the hourly rate that managers pay their employees. Many do not consider the hidden costs of a full-time employee in this equation. With a full-time employee, one has to pay for medical insurance, dental insurance, 401K matching, worker's compensation insurance, and other out of pocket expenses for an internal employee. These benefits can add up to amounts that rival the hourly rate charged by a good consultant. Managers often do not acknowledge the hidden costs of an employee vs. A consultant, but the costs are real and do have an impact on the profitability of the company. If the consultant is the right match, they can offer many more returns than the internal employee can and the fees only accrue for the duration of the project. They will not accrue weekly, as with a full-time employee.
One of the key concerns with external consultants are the horror stories about bad consultants that are abundant. It is easy to become a consultant, just proclaim yourself an expert and open your doors. However, the ease with which one can enter into the field is alarming. Earlier in this section, price was mentioned as a key to finding a reputable consultant. However, Chin (2007) cautions that price is not everything and that there are unscrupulous people out there in the consulting business. Chin categorizes bad consultants into several types: the snake oil salesman, the lonely derelict, the self-proclaimed idol, the doomsdayer, the slacker, and the step lightly. These descriptions are self-explanatory and describe every manager's worst consulting nightmare. The risk of hiring one of these personalities is a key disadvantage to hiring an external or internal consultant.
The case for hiring an external consultant is compelling in terms of access to capabilities that do not exist internally. However, one must be careful to research references carefully to avoid unscrupulous characters. Executive management can foster a productive relationship with both internal and external consultants. The key to fostering a productive relationship is the ability to communicate common goals and objectives. However, with proper attention to the necessary communication skills, the consultant will add much more value to the company than high prices. The right consultant will bring a wealth of experience to a situation and will provide an alternative outlook. This is the key to innovation in problem solving, making the external consultant worth every penny.
One must be clear as to why they feel they need a consultant. The external consultant will be focused on short-term goals. Whereas, the internal consultant will be able to develop plans that fit into the long-term strategic goals of the company (Nevo, Wade, & Cook, 2007). The decision to hire a consultant, either external or internal depends on the goals and objectives of the company. Management must understand what the consultant can and cannot do for the company. They must set realistic expectations, or they will set themselves up for disappointment.
A good relationship based on realistic goals and good communication can be the boost that a company needs. Consultants add value to the companies that hire them. They bring innovation and a fresh look at the way the company does business. Consultants are an excellent asset, but one management must be willing to do their research and get the right person for the job. Whether one decides to hire an internal or external consultant depends on whether the company needs someone long-term or for a short duration. The right match depends on the nature of the business and the reason why they wish to hire a consultant. There is no right or wrong answer that will describe every situation, just as there is no perfect consultant that will be right for every company. Good communication and due diligence are the keys to a successful relationship and a positive experience.
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